XEROX - THE BENCHMARKING STORY

• Strategic Benchmarking: Aimed at improving a company's overall performance by studying the long-term strategies and approaches that helped the 'best practice' companies to succeed. It involves examining the core competencies, product/service development and innovation strategies of such companies.

• Competitive Benchmarking or Performance Benchmarking: Used by companies to compare their positions with respect to the performance characteristics of their key products and services. Competitive benchmarking involves companies from the same sector.

• Process Benchmarking: Used by companies to improve specific key processes and operations with the help of best practice organizations involved in performing similar work or offering similar services.

• Functional Benchmarking or Generic Benchmarking: Used by companies to improve their processes or activities by benchmarking with other companies from different business sectors or areas of activity but involved in similar functions or work processes.

• Internal Benchmarking: This involves benchmarking against its own units or branches for instance, business units of the company situated at different locations. This allows easy access to information, even sensitive data, and also takes less time and resources than other types of benchmarking.

• External Benchmarking: Used by companies to seek the help of organizations that succeeded on account of their practices. This kind of benchmarking provides an opportunity to learn from high-end performers.

• International Benchmarking: Involves benchmarking against companies outside the country, as there are very few suitable benchmarking partners within the country.

A typical benchmarking exercise is a four-stage process involving planning, data collection, data analysis and reporting and adaptation. The planning stage includes identifying, establishing and documenting specific study focus areas, key events and definitions. The best-practice companies are identified and appropriate data collection tools are selected and updated for use. The purpose of the data collection is to accumulate qualitative data and learn from the best practices of different organizations. Information is mainly collected through questionnaires administered to all best practice companies. This stage also includes site visits to organizations that follow best practices.

The data analysis and reporting stage involves the critical evaluation of practices followed at high performing companies, and the identification of practices that help and deter superior performance. A detailed final report is presented, which contains key findings. When these findings are discussed, best practice companies also take part through systematic networking activities and presentations. The adaptation stage includes developing an initial action plan to adapt and implement the practices followed by high performance companies.

Of the total time spent on the above stages, planning takes up 30%, data collection 50%, and data analysis and reporting take up the remaining 20%. The time taken for the last stage, adaptation, depends on the scope of the exercise being undertaken by the company. The above stages comprise a series of steps that collectively complete the benchmarking process. Organizations usually customize this model or develop their own benchmarking model to meet their specific organizational needs.

By the early 1990s, many Fortune 500 companies and other major companies were implementing benchmarking to reap the benefits it promised. Benchmarking also became a key criterion for winning the Malcolm Balridge National Quality Award¹. According to research conducted by the International Benchmarking Clearinghouse, a division of American Productivity & Quality Center (APQC )², in 1995, over 30 companies reported a $76 million payback approximately in the very first year of their benchmarking implementation. Some of the companies that derived the benefits of benchmarking included Ford, AT&T, IBM, GE, Motorola and Citicorp. However, the pioneering efforts of Xerox in the field of benchmarking have undoubtedly been the most talked about and successful of such initiatives.

IMPLEMENTATION

REAPING THE BENEFITS

[1] A highly revered award given for excellence in quality in the US to businesses. It is based on seven parameters - leadership, strategic planning, customer and market focus, information and analysis, human resource focus, process management, and business results.

[2] APQC is a US-based nonprofit organization supported by nearly 500 companies, government organizations, and educational institutions. It provides the tools, information, expertise, and support needed by companies to discover and implement best practices in areas such as benchmarking and knowledge management.
 2000 figures.

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